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tv   Tech Check  CNBC  January 24, 2022 11:00am-12:00pm EST

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terms of subscriptions in the coming year. >> some of the biggest losses play out today are in some of the names that were among the highest fliers last year, at least until later last year. energy, by the way, the only sector now in the green to start the year everything else has turned negative amid this broader s&p correction that's going to do it for "squawk on the street. "tech check" starts now. good monday morning, welcome to "tech check." i'm carl quintanilla with jon fortt and deirdre bosa the nasdaq is down another full 2% today and leading the declines, ark funds, tesla, netflix down another 7
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the crypto crash, bitcoin and ether down by double digits over the past year after friday saw $137 billion wiped out from crypto markets bitcoin below 34k. social stocks losing some clout. the bears come after snap ahead of earnings, dee. >> we'll start with that sell-off tech sinking yet yet the nasdaq was down 3.3% and it's now down more than 16% below it's record close. ongoing debate here, how much of the sell-off has been rate focused, how much is business fundamentals late last year we got bad misses from the likes of snap, roku, pinterest, adobe, salesforce it had nothing to do with the fed or a shift to value stocks last week, though, it was netflix and peloton both sinking on soft demand and weak user growth this week we will see who gets punished, if they miss or just don't beat by enough perhaps some upside surprises too. we've got ibm earnings today,
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microsoft tomorrow, tesla, intel wednesday, apple thursday. jon, it is still early in the earnings season but what we've seen so far, the question of did it freak out the markets or is it a sign of more to come. i think that's what everyone will be looking for in this busy week. >> i think perspective is important here i don't think we saw anything close to a bad miss from adobe, for example, but these stocks have been running pretty strong, some of them, based on arguably just their fundamentals. you look at some of these stocks we've known they have been in a good spot for a while. i mentioned adobe. amd is another one i could throw out shopify. those are companies that positioned themselves very well over the past year plus, multiple years seeing how these digital markets are going to open up but, carl, they have been on a fantastic run and now i think there's a question whether there's an overall valuation
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reset happening here versus something else >> meanwhile, guys, the market not getting a lot of comfort from lower rates got the 2-year back below one. a theme that mike santoli is looking into this morning. >> yeah, carl. at this point, this latter phase of this sell-off really does not have a lot to do with day-to-day movements in yields. i've been skeptical of this whole relationship i think people made too much of it being directly about yields on the way up and the way down this is just a very crude way of looking at it. long-term treasury prices have diverged from what the nasdaq 100 is doing so this is the long-term treasury price obviously yields are kind of sideways over that period of time you still have this ongoing liquidation. you need to believe in a lot of things to pay 10, 15, 20 times sales for any company. you need to believe they have a great franchise.
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they're going to get a big piece of it. the earnings will flow through and maybe for a lot of people you have to believe that the fed keeping rates near zero is a big part of that so i think it goes into the psychology as well to some degree the valuation math. take a look at a couple of big secular growth winners in the last lung higher in the nasdaq that would be nvidia and tesla well afternoon to the typical tech stock over the last several months we were already struggling in terms of the cloud stocks were selling off all the way before this so you did see these big ramps, retail investor favorites, driven by stampedes of option buying they finally are coming down so to me it didn't really have a lot to do with yields on the way up or the way down or what the fed was going to do. there was a collective enthusiasm that has now been pierced to a significant degree. i think the big question now is where is the washout level i thought we might have seen
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indications that we were there but you've seen stocks making new lows last week that are still underperforming today. so we await that moment, guys. >> we're going to dig more into this and bring in dan niles. when he joined cnbc in late december he said to expect a 20% correction in 2022 dan, we are not there yet but your call is looking fairly precedent as mike was saying some of these names that have sold off continue to fall further today. >> yeah, i mean i think, unfortunately, the big difference, and we've been talking about this since last year, is you have inflation really high and people just forget how much of the market is just driven by liquidity, which some people take those stimulus checks and the fed expanding their balance sheet and some people buy crypto, others by meme stocks, other people buy houses, boats, and stocks. and so when that money starts to
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go away, you end up with this starting to happen the one metric nobody really talks about is valuations. we've been mentioning this for a while, but at the peak of the tech bubble, you take the market and divide it by gdp that was 1.4 it got up to 2 it's down to 1.8, 1.7. the average for 50 years is 0.8. so if you've got a fed that's very aggressive and growth slowing down, inflation pretty high and we've talked about why we think it will stay high, ultimately i think the market is down 20% i do believe with today's move, we wrote about this over the weekend, but over 50% of them were signaling oversold. so as much as i'm going to hate to do this, i'll probably be buying some stocks today because, you know, human beings are horrible investors you're buying at the top because crypto is going to go to 100,000
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and you're selling at the bottom and freaking out because now you've got all this pain and you're trying to deal with it. so for us we have over 30% of the portfolio in cash. we said it was our favorite investment coming into the year. so we're going to put some more of that cash to work and we'll see what happens. >> dan, how much of it i'm looking around gamestop is still above 90 a share, amc is still above 15 bitcoin at the moment still a hair above 34,000. these aren't exactly like, i don't know, bargain basement prices by historical standards so at what stage, if this is a valuation reset, at what stage would this be? >> there's no chance i'm buying those. so what i'm talking about is real companies so it's names like facebook or google, guys that make lots of money, lots of profits, that are market share leaders, that are profitable today not ten years from now and not
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based off of some theme that you think crypto is going to take over the world so for us, this is looking for real companies and more skewed towards services versus products remember, in 2020 we had -- people were sitting on their peloton bikes watching netflix, ordering groceries off of amazon and signing their documents with docusign hopefully by this time next year i'm going to be sitting on a beach in hawaii on a surfboard in a hotel on a flight i just took so what you're spending money on as this pandemic turns into an endemic and we learn to live with it like the flu that kills 30,000 to 40,000 people a year, that's going to change what you're spending money on don't forget, netflix missed two quarters lastyear. amazon missed two quarters last year this is not new. the big new is the fed is going to be very aggressive. easy money is going away and the economy is slowing down from
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pandemic-driven stimulus so, yeah, i wouldn't touch gamestop or crypto, but the real companies, that's where we're putting our money to work in. >> that kind of reminds me, dan, of your famous call about disney when the pandemic initially hit. i see it at 130 today. i wonder if that's going to be a name that you're going to take a look at. also more broadly, how you view like classical, cyclical trades, when clearly there are some hints at least, pmi, retail sales, revolving credit, that households are under pressure and growth is slowing. >> yeah, you're absolutely right, carl. disney is -- it hasn't gotten to the level where i want to step in yet but i was definitely looking at it last year and we'll see. it's a reopening play too in the sense that people aren't traveling to go to disneyland because you're afraid of what's going to happen with omicron but a year from now we're going to get there and you're right, the economy is slowing down and it makes sense that it should, because you had
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$5.5 trillion in stimulus from government measures over this pandemic you had the fed expand their balance sheet by $4.5 trillion in a very short period of time all of that stuff is backing off. so i think you have to be incredibly selective valuations for the first time arguably in a very long time are now starting to matter, and cash flows matter i think mike santoli talked about this ipos, et cetera, it's all shut down so access to free money is gone. >> he called it valuation math, i think, dan is it possible with the declines that we're seeing, especially in the markets today, that this could change the fed's calculus, that perhaps some of the wealth coming out of the markets here could prevent the fed -- could actually have an effect on inflation too and event the fed from raising rates as many times as the market is baking in right now? >> unfortunately, i don't think
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so i think this is the 1980s when volcker was forced into raising rates even when the economy was slowing down because inflation as really high the people watching your show obviously own stocks but 45% of the u.s. population doesn't own stocks so for them, their food bill is going up, their renting is going up, the cost of gas is going up and they're not benefiting from the stock prices, house prices, et cetera. we've talked about this on danniles.com, but you've got 3 million more jobs, openings than you have people unemployed that's going to keep pressure on wages. you've got the amount of unsold homes out there at about two and a half months. the normal is four to five months so that's going to keep pressure on rents. all of these things will keep inflation hot, which will make the fed who made a policy mistake last year by not raising rates will have to raise this
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year i think the next 3 to 5% is up in the market. >> dan niles, thank you for joining us we'll talk to you again soon we should also note, jon, that the nasdaq is down more than 3%, heading closer to the session lows. bitcoin losing nearly half its value since its record high in november. kit rooney is here with the latest on this crypto crash. hey, kate. >> hey, jon. cryptocurrencies have been slammed right alongside tech and growth stocks like you guys have been mexntioning bitcoin trading under 38,000 ether also a couple of factors, it's partially a result of cryptocurrencies becoming more mainstream that was seen as a bullish sign as the asset class matured over the past couple of years but it is a catch-22. macro funds adopted bitcoin and they are looking to sell and get
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liquidity. some of these guys are taking risk off the table lately. bitcoin has been trading right in line with equity markets as well kr crypto and stocks hitting their tightest level since 2020. analysts are pointing to retail investors losing their conviction the lion's share of losses are atribd to short-term holders who appear to be taking any opportunity to get their money back right now only 32% of bitcoin's market cap is held at an unrealized profit, so a lot of investors right now are underwater that low profitability, sustained investor losses and low investor sentiment tend to be the signs of a bear market in crypto one way to measure sentiment is the fear and greed index that is at a 13 out of 100 last month it was around 39. leverage another big theme we've talked about in recent weeks is also climbing.
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we've seen some changes lately noel atchison telling me there's a spike of bearish market and that's based on options skew dipping. there's also been a lot of l liquidations in the past 24 hours. more than $400 million have been leveraged. some holding out for a relief bounce but the next level they are watching, 29,000 back to you. >> that level keeps heading lower and lower. the crypto bulls are such a vocal group. it feels like they can justify any sell-off i just wonder, kate, what are some of the most prolific names in the space saying? how do they judge this we've heard for a long time that bitcoin isn't a currency, it's a store of value but now it's acting like a high growth tech stock. where are they saying it goes from here, the next catalyst >> yeah, you're right about the moving target there in terms of
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the next leg lower but some of the biggest most prolific names and software ceos that have gotten in early would say we've seen this before there's been a crypto winter and it's taken sometimes more than a year for crypto to recover to some of the other highs. but those who have been in the market for a long time recognize the volatility as a feature, not a bug. they say this is the way that it goes if you invest in cryptocurrencies, so these guys are long-term holders, long-term bulls and are trying to rally the troops you see on twitter. i think there's a lot of people who even recently in the past year or so started taking their salary in bitcoin, put some of their company's money into bitcoin and now it's on their balance sheet. so it is a different dynamic that we've seen. there has been volatility before but it's gotten a lot more popular. macro funds are now involved, but there's no capitulation on twitter why some of these big
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ceos are saying hold on. still bullishness on twitter i think at this point if they have committed so much of their career and reputation to bitcoin, nobody is saying at this point sell. so it's just a lot of bullishness out there. the long-term investors. we'll see how it works out, though. >> kate, thanks for that kate rooney watching crypto for us today. meanwhile as far as stocks go was netflix a canary for technology, down 10% today, wiping out nearly all of its covid-era gains. joining us to talk about that, long-time tmt investor morris mark morris, it is great to have you back. >> thank you, carl. >> the discussion today about how much larger, how much more engaged netflix' audience is before covid began does it deserve the same share price? >> netflix is not the first
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thing on my mind right now we had a medium-sized position we now have a token position i think it's a really good company run by really smart people when they reported the quarter, they sent a message. the message was, hey, we're going to have to spending more money and we're going to have to defer the timing of the improvement of profit margins. so i think right now my concern is obviously much broader. we've cut exposure dramatically in my hedge fund so that our net investment position is modest. but we can be very flexible there. we're keeping the quality. we think the quality will perform well i think the parallel might be 2008 2008 they cut everything apart 2009 anything that was really good came back better. i'm not saying that's what this year is going to be like, but what i am saying is that
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tactically i think that's the way you have to approach things. >> morris, how are you defining quality in this market how are you valuing companies? there's talk about fundamentals returning. what are the important fundamentals can you not invest in any company that's not profitable right now, even if its top line growth is exceptional? >> yes, you don't. you just don't i think there are a couple of lessons here number one, if you want financial staying power, okay, i think the first thing that happened, and this started in the fourth quarter, is that the markets started to suffer indigestion. jim cramer said 600 names were issued in the last 12 months a lot of them is spacs, but a lot of names, a lot of paper came out in that paper, there are some really good businesses but my criterion is really simple if it ain't making money, if it
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ain't generating free cash flow, we'll pass we'll watch it, we'll follow it, we'll see what happens >> morris, am i hearing you right, so nothing that isn't making a profit. how do you make outsize gains then you would have missed out on amazon, tesla, countless others. you're looking forquality but you could sacrifice some of those bigger gains that we've seen from remarkable companies over the last decades. >> i think it involves hard work and research we started buying apple in 2006 and again in 2008 and we still own it we have some alphabet that goes back to the original ipo that we came back into it in 2010 and 2011 so i think the criteria is a little -- a lot of this is in your gut too you sort of know when you see something really special about a business right now what is really special is companies that are generating tons of free cash flow that have
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powerful franchises and still growing very rapidly alphabet is still growing very rapidly. remember, it operates throughout the world, except for china. i can keep saying that about a lot of names so there is opportunity that's still open-ended and there's a secular trend benefitting it because we're in an omni-channel world, which means people buy both online and offline, a matt more marketing and selling is do know online. usually now when i go in a store, i know what i meant, i know the style but i may want to try it on, for example so i think you can buy some terrific businesses today and we're not yet doing much buying. we've got it down to a level where we're going to keep what we like. we definitely are invested in our equity fund because that's what it's for. we're definitely invested in our hedge fund but we've reduced
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exposure dramatically. one of the things you've got to realize is because we can do it, everybody can do it. the market is going to move fast both ways. you've got to figure out when it's real. when it's really going to get better, okay, because everybody is using the same way of hedging. you've got to be aware of that. >> finally, morris, we should point out there's a few media names doing well fox up on this upgrade saying that they're well positioned to benefit from sports betting. comcast and charter saying the view on broadband slowdowns is too draconian and they get upgraded at rbc. are you seeing things like that in your universe >> first of all, i don't disagree with anything that you said fox is intriguing. but we've been buying disney, that's a position we've had over the last couple of days. now, we haven't taken a major addition, we're just not doing any major additions right now. but it's our way of remembering that disney is avery cheap
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stock. cheap. it's trading well below its strategic value. that's one of my criteria now in terms of looking at something. and i think the thing you've got to remember about disney, carl, is that they own some of the world's most valuable real estate on a scale that's unprecedented. they have got 32,000 acres of property in the middle of the second fastest-growing state in the country where they represent the fulcrum of tourist destinations i'm going to agree with one of your previous guests the pent-up demand for travel is eno enormous ever we time we go out or talk to a friend, all they want to do is plan a trip i think that includes disney world. so when you look at disney's numbers, i'm just amazed, frankly. maybe i'm not amazed because brian roberts is a lot older than the last time he tried this he tried to take over the
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company 10 or 12 years ago and almost pulled it off disney us unbelievably valuable. >> morris, it's always good to get your views, especially on a day like that. we'll talk to you soon. >> you too, carl. >> hows that for a gutsy piece of advice. social stocks selling off. snap getting a downgrade, twitter and pinterest with price cuts as well julia boorstin checking in on the bears. >> well, jon, social media stocks are plummeting on some downgrades snap under pressure, dropping 10% after webbush downgraded the stock to neutral saying we see risk stemming from idfa headwinds. they also see difficult comps from stellar growth in 2020 and
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2021, increasing from tiktok also lowering the price target for snap citing the same issues and stressing the risks around those tougher comparisons. goldman also cutting its price target on friday and twitter, those shares are off about 5.5% after goldman cut their price targets on the stock. goldman also cut its price target for pinterest that stock is down about 4% as well now, of all of these social media players, meta is down the least, though. it is still down about 3%, nearly 3%. goldman did reiterate its buy and price target on the stock friday speaking of competition for all of those players with tiktok, just this morning cnbc's parent company, nbc universal announced a deal with tiktok for the olympics giving it more valuable content to compete with the likes of meta. guys. >> julia, i want to go back to
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snap, because, yeah, i understand all the analysts are getting, you know, religion about how they need to cut their targets and everything but it was just back in late september that this thing was trading above 80 bucks a share and the story was that it was different from your twitters and even facebook with the regulatory and data headwinds and problems that it faces snap has gone from 83 or so down to now below 30. have the fundamentals of that company, outside of idfa and the ios stuff we know about, has something fundamentally changed? >> certainly the fundamentals have changed the question is are snap strengths as strong as analysts thought back then. we'll hear earnings at the end of next week but the question, is snap really different. can it be more resilient to those apple add targeting issues
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can its user growth remain strong as people get out in the real world more. can snap be the app that is both use first of all close ties and for friends when people are isolated and also has people use the snap map as they go out and about i think as we talk about meta, formerly facebook, snap has been investing in augmented reality for a very long time now do those investments pay off in terms of targeted advertising, interactive advertising using those features so snap has a lot of things that make it different from the other players. the question is do they make it different enough and what happens with tiktok? we can't underestimate the massive growth and draw of that platform we'll see if people are spending more time on snap or on tiktok when we get those numbers next week. >> gotcha. it's lost almost two-thirds of its market cap in less than six months so i wonder, you know, and off about 10% today. i wonder what's there. we'll see.
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julia, thanks. meanwhile, the payments space another sector taking a hit in the broader sell-off. our next guest sees opportunity there but says investors need to be patient about operating environment. change is near and will benefit the stock. some of his top particulars are paypal, visa, mastercard and affirm james, welcome who's suffering the most unjustly here in the payment space, would you say >> well, that's a big question look, i think that probably the most controversy is around affirm right now consumer credit business you're seeing not only a normalization of credit behavior but a rise in interest rates that's putting a lot of pressure there. we still have a lot of confidence that numbers can go up this year but we have to recognize there is a changing environment near term. but in the long run there's still a lot of opportunity for
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them to grow their customer base and deliver financial services but all the payments companies across the board, whether we're overweight or equal weight or not are really getting hit and have been for the last six to eight months. >> james, you sayyou're waitin for m & a. what do you think has changed or hasn't changed in the last year? concernly some of the valuations of the high fliers have come down but i remember when visa was trying to buy plaid and they came under regulatory scrutiny do you think there's less of that in the current environment? >> when we look at visa and mastercard specifically, they're always looking for new technology acquisitions. we don't think it's as important for them if we look at the rest of the payments ecosystem, we do think given the high levels of capital investment, et cetera, that acquiring these new technology companies that are entering into the payment space ends up being important ways to improve the technology capabilities and
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long-term opportunities for most of the companies most managements have been reluctant to pay up for valuation, especially over the last year, as we've seen values come down low. that may change. but that's an important way to create value over the long run. >> if not visa and mastercard, then who, james? who has the capital to do so >> yeah. so we've seen paypal, square obviously with its acquisition of after pay some of the least names were equal weight fis, global payments these are all companies that we think could and probably should be doing acquisitions right now but they have been reluctant because of prevailing valuations. >> james, some of your peers on the street today on affirm say that there could be some upside guidance on gmv even though longer term risks with credit checks and so forth.
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are there names where you think maybe short term there could be some relief based on fundamental elements of the print? >> yeah. i think for affirm we would be in that same camp. affirm is probably one of the names where we have the highest conviction that there could be a better outlook than what is built into estimates today remember, they started accepting amazon -- or amazon, better said, started accepting affirm late in the december quarter our sense is that could be tracking a bit better than had been anticipated originally. they also have a very nice relationship and partnership with shopify we think that's starting to ramp and just the overall demographics really favor their go to market so affirm among the companies we cover probably has the best opportunity for near-term revision. >> james, thanks so much appreciate that. a lot of attention on the payment space. take a reset here.
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in the past half hour, the dow continues to do a reset, down 670. we're just south of 4300, basically south of a 10% correction off of the all-time high on the s&p and the vix still elevated near 35 let us squeak in -- sneak in a quick news update with rahel solomon. hi, rahel. today's sell-off getting added fuel from a report that u.s. business activity barely grew in january. pmi index fell to its lowest level in months. crude dropping as much as 3.5% before rebounding oil prices are also being pressured by a stronger dollar. energy stocks some of the biggest losers all s&p 500 energy stocks are down even halliburton, which beat earnings estimates and doubled year ago profits with help from rising oil prices. they also hiked its dividend by more than 160% the only big winners today is
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kohl's the retailer surging 30% the firm sycamore partners offering more than $9 billion for the company. now you're up to date. jon, i'll send it back to you. hopefully that was quick. >> very quick and very valuable. thank you. the nasdaq, meanwhile, down more than 3%, back near the lows of the day meme stocks and ark funds both falling hard today and in the past few weeks what a difference a year makes dom chu, what's with this move >> you take a look at where the highs were in many of these meme stocks and the ark etf and we've seen a sharp move. if you take a look overall as what is driving some of the downside today, specifically within the nasdaq overall that pretty much sets the theme for many of these meme stocks and certainly with the ark funds involved as well look at netflix, airbnb,
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crowdstrike, tesla, nvidia, some of the big' names out there with regard to technology, media, that next generation of companies in the new economy netflix down 10%, air bbnb down 10% as well. if you look at how that's playing out with the ark funds in particular, with the ticker arkk, over the course of the last couple of years, and this is a chart that's been making the rounds a lot over the last 24 hours or so this notion that berkshire hathaway, when it comes to a company overall, one that has a lot of financial interest in stock holdings versus the ark innovation etf, the early part of 2021 we saw the biggest gap in performance between the two of them. all of a sudden now they have converged. meeting that in this tortoise and hare type situation, the ark tech etf has faltered so
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berkshire is trading over the course of the last couple of years. it's indicative of that growth versus value trade if you take a look at some of the stuff driving the action for the downside for that ark tech innovation etf, look at stocks like robinhood markets, draftkings, block inc., and you can see the downtrend very much in place robinhood markets down 70% bigger than 50 to 60% declines for block and draftkings some of these have taken it on the chin if you look at the biggest names out there, when we talk about these etfs and the funds there, often times the names we talk about the most are names like tesla,docusign, teledoc becaus they tended to be some of the bigger holdings. all these are down 4% to 12% for coinbase a lot of bitcoin driving that
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downside move here but that's the reason why you're seeing a little more of that kind of feel, that sentiment driving this tech and growth trade it's become indicative of what's happening with the ark funds one way or the other, you're going to see a lot of those funds and those indices continue to suffer if these names continue to do that, guys. >> dom, do you have any thoughts on the nature of the volatility? we've been talking for a few months now about the number of retail investors getting involved in options, perhaps trading on margin. there can be this mindset as you know as well as anybody that in a bull market every gain is deserved and every drop in the stock is a theft but what does the volatility or the nature of the volatility tell us about how this is the same or different from what we've seen in the past >> so there are similarities, there's no doubt about it. the valuation side of things, the idea that there could be a certain sense of euphoria in
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certain key parts of the market that might be indicative of bubbles or that kind of behavior, it happened back in 1997 through 1999 and in certain parts it's happening right now the one thing we didn't see as much in 1999 as much as retail traders were part of that particular move, we didn't see as much of the tools that were available for the traders to take the fees that they have we have seen a lot more because of the add venting of many of these trading platforms like robinhood who have offered commission-free trading. the interesting part with the moves that we are seeing right now, it's very severe. there's no doubt about it. it's a sharp pull-back but it hasn't come with any kind of real rigorous amount of volatility the vix is still, yes, 30 to 35, but it's nowhere near the kind of levels that we've seen during panic moves, especially during the pandemic lows. so you could make the argument that there's an orderly, so to speak, component to this relative to the kinds of
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behaviors that we've seen tied to volatility. i guess it's going to be interesting to see whether or not you do see more volatile downside moves even today's session, we've drifted lower, found some bids, drifted lower again. whether it stays that way through the next hour of trading, that's going to be something to watch. >> that's a perfect lead-in because we'll stay with some of the stocks dom mentioned they are among the hardest hit robinhood he mentioned, meme stocks as a well our next guest sees a trend through every company that went through robinhood last year reporting those stocks are down 60% from their highs as a whole. robinhood's price was $38 and it's now below $12 a share they're not ipos, but amc and gamestop are worth mentioning. they have both cratered and are down double digits ron john, you looked at the role
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of robinhood and fomo, how that played into the markets. easy when there's enthusiasm and exuberance, but some of those retail investors that got in are learning the hard way what some of those leverage and those names getting in early or at the peak leaves you with >> yeah, back in march robinhood -- march 2020 robinhood said it was going to give the everyday investor access to ipos but i went through the ipos that were marketed through this program and they're down 40% from their first day of trading and more importantly down 61% as of this morning from their highs. what happened in every single situation, there was a pop either the first day of trading or within the first few days and then a gradual and sometimes brutal decline, which makes accepts. sense it introduced 22 million users
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into the ipo process of course you're going to see that price action. i think it's a really important thing to remember that as all these new tools were introduced, it completely changed the way a lot of these companies moved whether it was newbank or sweetgreen, everything saw that same pattern >> ranjan, it wasn't just ro robi robinhood. the nasdaq is down nearly 3.5% we've seen the selling accelerate the last few moments. >> so, first of all, sofi has a very similar program to robinhood. robinhood came out big with the democratizing finance thing, but i agree, it's introducing this thing that seemed to be this area of exclusivity in the past to an entire new generation of investors. don't get me wrong, i was here in december saying the era of the story stock was over and the crash has already begun.
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but in 2021, ipos in aggregate were down 14% six months out from when they started trading that was across all 400 traditional ipos robin hhood was down 40%. so on a relative basis they performed a lot worse but it makes sense given the mechanics of the program today is brutal. it can continue to be brutal but we have to look at which are the stocks that are more vulnerable to these moves given the types of money that have rushed into them. >> ranjan, when you look at the damage that has been done to them going back months, and i'm talking about the pelotons, the t docs, the zooms, how much of that has been at this point constructive given that these names are not necessarily going to go to zero? >> yeah, i genuinely believe these moves are constructive in the sense that they're just in some ways a reversion to the
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traditional financial metric means. these are real companies that have real businesses, many of them, and they should be in a good position. but the question is, like in 2021, totaling, buying the dip, these were the terms that kept running through every single segment. but i think capitulation is who we have to keep an eye on. who's going to give, when are they go to give and how violently are they going to sell as you have the fed coming in for liftoff and quantitative tightening, it's completely going to change the risk profile of everyone, whether you're sitting at home or you're some big pension fund, and who is going to be buying these stocks and at what level do they come in peloton is still trading at four and a half times sales and it's a decelerating business. that's not cheap yet. >> we've talked about at least they're going into the markets and learning and it seems like a
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harsh lesson if you bought some of these names at the top. but do you think some of the new retail investors will maybe go from price to sales to price to earnings and exclude a lot of the companies that don't have earnings that they don't like? >> i think investing has fundamentally changed. people aren't going to completely exit the markets. but again, in the future, what is a traditional software po and who companies are good value will be the things people talk about rather than who has the most short interest and let's try to squeeze them. i do think investing is going to get better once people take the lessons that they're learning right now. but again, the only question is, is this just a reversion to the mean and that the froth gets shaken out, or can something worse happen i think that's what we're all going to be watching, especially with the fed this week and corporate earnings this week from the big guys.
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that's what we need to keep an eye on. >> well, something worse can usually happen, thank you. we will check in on more companies reporting earnings this week. verizon and at&t, those stocks have severely underperformed but is now their time? don't go anywhere, we'll be right back
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severe sell-off on this monday morning the dow is down more than 800 points, almost down 850 a couple of moments ago there are some pockets of strength let's bring in our julia boorstin to talk about although the disneys, netflixes and snaps are getting hurt, there are some legacy media names fighting this tape. >> comcast is a rare stock in the green up half of a percent and that's on an rbc upgrade to outperform rbc saying that they believe that concerns about subscriber growth are overblown and that there is more potential there. now, in just looking at comcast and putting it in perspective, calm cast is cnbc's parent company and it is up 2.5%. but outperforming others such as disney and others in the connectivity space because this week we're going to hear from
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verizon, at&t and then comcast and then next week we will be hearing from t-mobile. i want to point out that t-mobile is up 2% right now, and that's on a report that was just out today saying that t-mobile has made gains, increased its lead over its rivals in terms of 5g speeds and availability t-mobile also has the advantage of not being part of that issue of the faa delaying the deployment of 5g around the airports so we do see t-mobile shares up today. over the past year they are down 20% over the past year and it's been a rough year as we go into the at&t and verizon earnings. at&t down 10% over the past 12 months verizon down about 8%. and now the focus for those two in particular will shift to what happens now that they have gotten rid of all those media assets we expect that warner, discovery deal to close relatively soon,
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in the next six months if that happens, what's next in terms of 5g, in terms of mobile subscriber growth and it is an increasingly competitive space, guys. >> julia, it's interesting when i think about connectivity and the impact on these names, overall, at least at this point in the economy, demand from consumers seems to be steady, and we know that there's been a shift toward digital consumption of all kinds of things omni channel necessitates some kind of connection, whether it's wired or wireless. is that part of why analysts are perhaps warming in some cases to some of these names? >> yeah. look, you're right that everyone needs broadband, everyone needs mobile service for so many different reasons and that has become even more evident than ever during the pandemic i do think for some of these companies there was a question of whether there was going to be a pull forward of growth during the early part of the pandemic but we did get early
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announcements of those actual subscriber numbers from both t-mobile and from verizon. i'm sorry, from t-mobile and at&t so we haven't gotten those numbers from verizon but because we've gotten a sense of user growth that's in line or better than expected, it's really about guidance and we've been saying this for a lot of the companies, it certainly is true for netflix but what do they expect to come next there has been so much competition. they have been investing so much in 5g, what's the next thing in terms of enabling them to gain share and make sure that subscribers upgrade to these next generation services. >> let's get a gut check on google, and alphabet the stock is in the red, lower by 3%. google is facing more regulatory scrutiny and this time it is all about location tracking. attorneys general from d.c., texas, indiana and washington filing separate lawsuits against the tech giant claiming it
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secretly tracked the location of users. even though users turned it off, google continued to collect the data this was the big faang winner closing the year up 65%. it is now taking a hit in the sell-off citing 12% 12% since tf the year >> shopify falling 27% just in the past week as it signals it may be increasing spending down 10% today we're going to hit some of the e-commerce names after the break. dow down 950 points. sofi, another name that got a burst of good news last year, down 15% that's about a one-year low. back in a moment competition beat us again. how? they have a better finance system than we do. i feel like they might have a better finance system than we do. workday. how do they make better decisions faster? workday. it's got to be something workday. i think i got something. work...
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welcome back just a couple of minutes ago, the 23nasdaq touched session lo. it's now up a little from that level, but that's more than 500 points on the nasdaq those are numbers we're used to talking about with the dow the dow off the least. little more than 2.5, but that's nearly 900 points. checking in on shopify, the stock falling about 25% in one week after a plunge on friday. the canadian e-commerce giant confirming reports it terminated
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contracts with several warehouse partners halving its capacity as it shifts its strategy as it takes on amazon. the stock at its lowest price since june 2020. still strong here. a lot of analysts supposing that what's happening here is shopify preparing for its own fulfillment service to take on more of these costs itself versus farming them out. now, if you believe in the company's potential and if you remember amazon's playbook, long-term, that might not be such a bad thing, but short-term, especially based on the market action we've seen these days, investors not taking it so well >> 25% in a week it's about steady in this current environment. you're seeing the selloff affect so many of these high growth names. you're going to hear lot of calls for comparisons to amazon.
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but other companies that are profitable will say you've got to be patient in these kmmarket an this kind of a selloff, amazon at one point was less than $2. the kind of carnage we're seeing, also netflix down 40% year-to-date it goes back to the conversation we had at the beginning of the show what has changed fundamentally >> you mentioned amazon, down 3% back to 2700 that's going to take you back to june of 2020 meantime, ibm earnings in just a few hours. i'm reminded, jon, about the cut to sell at ubs a couple of weeks ago while some expansion was to be expected post spin, the long-term average is better looking optically because of the spin, but still a lot of concern about the margin profile it will be a good lens into what enterprise is looking like in the coming quarters. >> i think this is one of those earnings reports that's going to
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be important because if you're interested in cash flow, you know, ibm over the past several, several years, has been really focused on managing for profitability. so how does a stock like that get treated in an environment like this where top line growth is not as exciting to investors and maybe a little bit more safety, cash flow, profits are if you've got more of the safety and profits, but little to no top line growth, you know, consistently, how does the market treat that based on what gets said? i don't know >> yeah, it's been one of these stocks, right, classic tech value legacy play hasn't really gone anywhere over the last what, ten years. but it's times like these when the markets get kind of scared off of high growth that they look to an ibm this spinoff will be interesting guys because it's going the make
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it difficult to really see what's underlying this growth at the new ibm and the results of those cloud, the cloud initiatives they've gone so hard on, carl >> and as far as, we've mentioned this call a couple of times today, but there was a reiteration of a boyuy on microsoft. we expect another strong quarter in fiscal q2 as our conversations point to a healthy demand environment including cloud adoption that's going to be key getting some signal from megacap tech that there is stability in demand in some of these high growth areas we'll see how far that goes in reassuring some of the bulls >> that's going to be critical and that's coming up this week one more thing after a 24% drop on thursday, peloton is reportedly attracting an activist investor, blackwell, calling for the ceo to step
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aside. on friday, we talked about apple as a possible buyer with shares below the september 2019 ipo price of $29 this comes as peloton hires mckenzie to help cut costs cnbc reporting production halts and now the bike making an appearance in the season six of billions, the character having a heart attack after a ride. peloton saying they didn't give permission for billions to use it cardiovascular exercise helps people lead long, happy, healthy lives. this is a tech company, what it calls itself a tech company. they have those dual class shares it would be difficult to replace foley or push him out given the way it listed. >> shouldn't peloton worry less about fictional story lines, people having heart attacks on their bikes? at least they're riding the bikes. worry more about investors
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having heart attacks about the movement in the stock price based on their handling of the supply chain and their plans, carl i mean, i know perhaps not every piece of publicity is good, but i mean, people, you know, in fictional shows, have heart attacks running in nike shoes. you don't see nike getting worked up about it our shoes are great. people don't have heart attacks. i don't know >> i think the more interesting comment about it, guys, is the idea that a lot of these stay at home names, dee, people anticipated they would have a come to jesus moment because the pandemic was largely behind us, but it's a difficult call when you're, the fed is just such a powerful dynamic add on to that today the geopolitics and it erases that reopening trade. >> we talked so often over the last few years about the pull
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forward and these names, their valuations growing too large not sure anyone saw this kind of a hit this quickly the ark funds are getting hit perhaps harder than anything else out there as sort of an indication of that stay at home trade. >> yeah. the 4% decline on the nas, it is the worst day now since september of 2020. and it does take you back to levels we last saw in may. let's get to the judge we begin with breaking news. i'm scott wapner take a look at the major selloff underway on wall street. the dow jones industrial average now down by 800 points slightly off the lowest levels of the session, but there is carnage all over the place s&p 500 down 3%. nasdaq down nearly 3.5% as a significant amount of selling continues to take place within tech it feelings like an all hands on

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